Example Analysis of Organisation Capital Structure

This analysis originally from my Financial Management II paper and for study purpose. Plagiarism is not allowed..thank you.

Analysis of QSR Brands Berhad Capital Structure

Capital structure is the combination of debt and equity to finance a company. It is usually measured as either ratios of debt to equity or ratio of debt to assets. To overview the financial strength of a company, there are four leverage ratios can be used; Debt ratio, Debt equity ratio, Equity multiplier and Interest coverage ratio. Generally, the most used by analysts are the Debt ratio and Debt equity. These two are popular measurements tools in evaluating a company’s capital structure.

Formula of Debt ratio = Total Liabilities / Total Assets, then multiplied by 100%

Debt equity ratio = Long term liabilities / Total shareholder’s equity

                                     

The Computation of Capital Structure of Firm

	Debt Ratio		Debt Equity Ratio
Formula	Total Liabilities	x  100%	Long term Liabilities	x 100%
	Total Assets		Total Shareholder Equity
Year
2005	214,928	x  100%	148,375	x  100%
	592,458		239,288
		= 36.27 %		= 62 %
2006	273,631	x  100%	200,011	x  100%
	699,511		244,253
		= 39.12 %		= 81.87 %
2007	325,255	x  100%	170,979	x  100%
	801,772		245,471
		= 40.56 %		= 69.65 %
2008	268,788	x  100%	178,717	x  100%
	903,097		286,383
		= 29.76 %		= 62.30 %
2009	759,387	x  100%	301,570	x  100%
	2,092,791		286,384
		= 36.29 %		= 105.30 %

Table 2.  The Computation of Ratios in Percentage for the Firm.

   

Year	2005	2006	2007	2008	2009
Debt ratio	36.27%	39.12%	40.56%	29.76%	36.29%
Debt Equity Ratio	62%	81.87%	69.65%	62.30%	105.30%

The Debt ratio of QSR Brands Berhad in year 2005 is 36.27%, 39.12% in 2006 and 40.56% in the year 2007, indicates a significant increase in debt ratio each year. The highest debt ratio is in year 2007 of 40.56%, shows the firm’s debt leverage increased at RM325 million of total liabilities over RM801 million of total assets. In 2008, the debt ratio was dropped tremendously at 29.76% and favoured to the firm, its shows the company’s debt leverage was dropped fairly and increased the capital equity. In year 2009, the debt ratio was increased to 36.29%  but still satisfactory for a big firm with total assets about RM2,092.7 million. The firm was increased in capital equity through its fund management, its shows that the firm’s capital management prefer for equity financing than debt financing.

            The Debt Equity ratio looks bigger in size with 62% in year 2005, 81.87% in year 2006, 69.65% in 2007, 62.30% in 2008 and 105.30% in year 2009. Besides, its higher ratios indicate its consistence of its capital structure based on debt financing. We can see a tremendous increase of almost double the ratio in 2005 of 62% to 105.30% in 2009. It shows that the total debt owned by the firm exceeds the equity shareholder’s. However, for a big corporation is not a risk of market plunge due to its big assets and shareholders confidence.

The evaluation of capital structure finds that the QSR Brands Berhad tends toward the debt financing instead of the equity financing. Main sources of debt financing are commercial banks, which are offers short term loans and long term loans. The liabilities of loans and borrowings for the firm were increased from RM173 million in 2008 to RM264 million in  2009.

This study finds that even though has increased in profitability, firm more tend toward debt financing thus confirming the finding of The Trade-off Theory of capital structure. This explained here, the firm with high income and safe with tangible assets are more likely to have high debt levels than a firm with risky or intangible assets.

As part of its overall prudent liquidity management, the firm maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the firm strives to maintain available banking facilities of a reasonable level to its overall debt position. As far as possible, the firm raises committed funding from both capital markets and financial institutions and prudently balances its portfolio with some short-term funding so as to achieve overall cost effectiveness. The firm manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all refinancing, repayment and funding needs are met.

            From the evaluation, the cash flow interest rate will be the risk that affect future flows of a financial instrument fluctuate because of changes in market interest rates. Fair value interest rate is also the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. As the firm has no significant interest-bearing financial assets, the firm’s income and operating cash flows are substantially independent of changes in market interest rates. The firm’s interest-bearing financial assets are mainly short-term in nature and have been mostly placed in fixed deposits or occasionally, in short-term commercial papers. The firm’s interest rate risk arises primarily from interest-bearing borrowings. Loans and borrowings at floating rates expose the firm to cash flow interest rate risk. Loans and borrowings obtained at fixed rates expose the firm to fair value interest rate risk. The firm manages its interest rate exposure by maintaining a mix of fixed and floating rate borrowings. In the previous year, the firm had interest rate swaps with a notional contract amount of RM5,717,000. The interest rate relating to the interest rate swaps as at 31 December 2008 had been fixed at 5.34% per annum until its maturity in May 2009. There is no interest rate swap facility outstanding as at 31 December 2009.

The foreign currency is another risk that arises from subsidiaries operating in foreign countries, which generate revenue and incur costs denominated in foreign currencies. The currency exposure is primarily Singapore Dollars. The firm is exposed to foreign currency risk on purchases that are denominated in a currency other than the respective functional currencies of the firm entities. The currencies giving rise to this risk are primarily US Dollars. In the previous year, the firm was also exposed to foreign currency risk arose from borrowings denominated in foreign currencies. The firm had currency swaps that were primarily used to hedge the foreign currency exposures on the borrowings. The currency exposures were primarily US Dollars and Singapore Dollars.

The firm credit risk is primarily attributable to trade receivables. The firm trades only with recognised and creditworthy third parties. It is the firm’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on ongoing basis and the firm’s exposure to bad debts is not significant. For transactions that are not denominated in the functional currency of the relevant operating unit, the firm does not offer credit terms without the specific approval of the Head of Credit Control. The credit risk of the firm’s other financial assets, which comprise cash and cash equivalents, marketable securities and noncurrent investments, arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these financial assets. As the firm’s transactions are substantially on cash basis, its credit risk is minimal.

            In year 2009, QSR Brands Berhad recorded revenue of RM2,760.3 Million, an increase of 418.1% over year 2008 of RM532.8 Million. This shows excellent achievements in increasing the group’s revenue, profit before tax registered at RM230.3 Million against RM97.7 Million in 2008. The group continued growth in revenue and profitability as a result from the strategic initiatives done like Pizza Hut has expanded its network with 26 new restaurants across Malaysia and Singapore, and QSR expanded its KFC network with 49 new restaurants in Malaysia, Singapore and Cambodia.

Good Luck For Your Assignment!

Comparative Analysis Between Islamic Banking and Conventional Banking in Malaysia

PAPER ISLAMIC FINANCIAL MANAGEMENT

In conventional banking, the banker - customer relationship is a debtor - creditor relationship where the bank earns a profit by making a spread between interest charged on the borrower of funds and interest paid to the depositors. On the other hand, Islamic finance is governed by Shariah rules that prohibit interest-based transactions. One must refrain from making a direct comparison between Islamic banking and conventional banking.

               Conventional banking is essentially based on the debtor-creditor relationship between the depositors and the bank on one hand, and between the borrowers and the bank on the other. Interest is considered to be the price of credit, reflecting the opportunity cost of money.

              Islamic law considers a loan to be given or taken, free of charge, to meet any contingency.  Thus in Islamic Banking, the creditor should not take advantage of the borrower. When money is lent out on the basis of interest, more often that it leads to some kind of injustice. The first Islamic principle underlying for such kind of transactions is “deal not unjustly, and ye shall not be dealt with unjustly” [2:279] which explain why commercial banking in an Islamic framework is not based on the debtor-creditor relationship.

             

             The other principle pertaining to financial transactions in Islam is that there should not be any reward without taking a risk. This principle is applicable to both labour and capital. As no payment is allowed for labour, unless it is applied to work, there is no reward for capital unless it is exposed to business risk.

Comparison of the conventional banking and Islamic banking are shown in box diagram as below:-

Conventional Banks	Islamic Banks
1. The investor is assured of a predetermined rate of interest.  Lending money and getting it back with compounding interest is the fundamental function of the conventional banks. It can charge additional money (penalty and compounded interest) in case of defaulters.	1. In contrast, it promotes risk sharing between provider of capital (investor) and the user of funds (entrepreneur). Participation in partnership business is the fundamental function of the Islamic banks. So we have to understand our customer’s business very well. The Islamic banks have no provision to charge any extra money from the defaulters. Only small amount of compensation and these proceeds is given to charity. Rebates are given for early settlement at the Bank’s discretion.
2. It aims at maximizing profit without any restriction. Since income from the advances is fixed, it gives little importance to developing expertise in project appraisal and evaluations. It does not deal with Zakat.	2. It also aims at maximizing profit but subject to Shariah restrictions. Since it shares profit and loss, the Islamic banks pay greater attention to developing project appraisal and evaluations. In the modern Islamic banking system, it has become one of the service-oriented. functions of the Islamic banks to be a Zakat Collection Centre and them also pay out their Zakat.
3. The conventional banks give greater emphasis on credit-worthiness of the clients. . The status of a conventional bank, in relation to its clients, is that of creditor and debtors.	3. The Islamic banks, on the other hand, give greater emphasis on the viability of the projects. The status of Islamic bank in relation to its clients is that of partners, investors and trader, buyer and seller.
4. A conventional bank has to guarantee all its deposits from risk.	4. Islamic bank can only guarantee deposits for deposit account, which is based on the principle of al-wadiah, thus the depositors are guaranteed repayment of their funds, however if the account is based on the mudarabah concept, client have to share risk in a loss position.

            Moreover, Conventional banks encourage people to keep their money idle in banks in return for profit on a fixed proportion after a calendar year which brings us back to the concept of interest or usury. As expected, such liberties have not been allowed in Islam so Islamic banks encourage people to invest their money instead of storing it for a long period of time.

 In addition, Conventional banks, since they run on the concept of creditor-debtor, they may dolly out loans to even those aiming to start a business of alcohol or any unlawful good for that matter. After all, maximum gains and profits would be the main target of the bank at the end of the day and a dealer in alcohol would assure them that. On the contrary, Islamic banks would place certain checks and balances to ensure that money lent is used in an appropriate manner so that the borrower does not make unlawful gains. 

            The fourth and foremost difference that underlies these two banking systems is the concept of interest or Riba (Usury). While interest might play a leading role in the Conventional baking system all over the world, Islamic Shariah has allowed absolutely no room for such concepts; in fact, they prohibit dealings in interest at all costs. As opposed to the concept of Riba, profit and loss sharing between banks and clients has been allowed in Islam and that really forms the basis of Islamic banks. Also, Islamic banks offer service-oriented functions such as Zakat collection to ensure that money in the bank is ‘purified’ and also spent to help those in distress. Since Conventional banks are driven by maximum profit motive, such services remain absent from their system. In essence, social consideration remains a major target in Islamic banking whereas social injustices are common in Conventional Banking.

GOOD LUCK EVERYONE!

Kursus Pra-Bantuan Modal Lembaga Zakat Selangor

Sabtu dan Ahad lepas hubby ku telah menyampaikan kursus untuk para peserta Asnaf di bawah bimbingan Pusat Zakat Selangor. Terima kasih pada En.Amiza Abu Adam boss kepada Grow Management Services yang sudi menjemput En.Sapowan Sanusi sebagai penceramah kursus tersebut.

            Kursus Pra bantuan Modal Lembaga Zakat Selangor ini diadakan di PULAZ (Pusat Latihan Akademi Zakat) Shah Alam, Selangor. 5 module yang disampaikan oleh beliau ialah Motivasi Keusahawanan, Teknik Komunikasi, Kewangan dan Perakaunan, Membuat Rancangan perniagaan dan akhirnya  Pembentukan perniagaan.

           Besar harapan En. Sapowan Sanusi  agar  ilmu yang disampaikan kepada peserta Asnaf itu dapat aplikasikan dengan baik dalam perniagaan mereka  dan menambah baik lagi kualiti hidup mereka sebagai Usahawan Muslim yang Berjaya.

Bersungguh-sungguh menyampaikan ilmu keusahawanan

Peserta sedang membuat kerja berkumpulan untuk proposal 'Rancangan Perniagaan'

Yess!!..anda boleh!..yakin boleh...itulah agaknya yang en. hubby cakap..hehehe

Amboii...tekunnya semua..rugi aku tak ikut, best tau tengok dorang present. Bibik aku cuti...so kena la dok rumah jaga 4 orang askar2 aku tu...huhu

Lagi gambar2 peserta...

Hubby aku ni kalau berceramah suka buat lawak...kekadang tu hal anak bini sendiri pun dijadikan contoh...hishh abang ni malulah orang tau kisah kita...alaa..abg cita yang baik2 aje..hehe daripada jadikan kisah orang lain sebagai contoh takut jatuh fitnah pulak..betul tak? kita bukan bagi ceramah politik...hehehe gelak aku, betul jugak kata laki aku tu...
Dan hari demi hari semakin aku belajar betapa mahalnya nilai setitis ilmu itu...Alhamdulillah..

Opportunities and Threats of Environment Factors to Organisation

In Strategic Management, very important for organisation to find out what is their opportunities and threats of environment factors towards the organisation. This is in order to well-justify every plans and decision making to achieve their goals and objectives.

EXAMPLE

Opportunities and Threats of Environment Factors to Construction Firm in Malaysia

Factors	Opportunities to Nisasharmeen Sdn.Bhd.	Threats to Nisasharmeen Sdn.Bhd.
Economic	·         Government as a major client. ·         Government as a policy maker. ·         Sources of finance from financial institution in Malaysia. ·         Organisation has strong capital and experience more than 30 years in construction industry.	·         Material price fluctuations ·         Low skill workers ·         High market competitions for the projects.
Social	·         Good reputation among clients ·         Attitudes towards social responsibility. ·         Desire of modern living lifestyles ·         High level of education	·         Possible negative publicity ·         Environmental issues such as Water and air pollution. ·         Cultural differences ·         Natural phenomenon such as floods and landslides.
Political	· Government policies in construction development ·         Government support and incentives ·         Political stability	Objections from community on development. ·         Objections from local lobby group.
Technological	·         New technology and Hi-tech Equipment in construction industry. ·         Hi-tech equipments of Information Technology ·         Eco-friendly to environment.	·         Safety in construction site or workplace. ·         Emergence of new technologies. ·         High cost material due to high cost of technology used.

GOOD LUCK FOR YOUR ASSIGNMENT!

Filem Prometheus Tidak Sesuai Ditonton Oleh Umat Islam

            Malam tadi aku gagahkan juga teman hubby yang nak sangat tengok midnight movie terbaru iaitu `Prometheus’.  Aduii..takde mood lansung..aku memang kureng minat tengok cita ala2 alien nih, dengan lenguh2 badan lepas swimming petang tadi yg tak agak2..fuhh dekat 1 jam setengah aku dalam kolam tu ngan anak2..hehe, sampai mata naik kabur laa..alamak panic gak aku kabur mata tak hilang2 dari abis mandi sampai tengah malam barulah clear balik. Pelik aku swimming pool  lain aku mandi takde pun kena kabur2 mata nih..banyak sangat ke klorin yg dorang letak, bahaya nih…anak2 aku relaks je sebab dorang  guna  goggle..


                Komen aku pasal movie nih..sepatutnya Prometheus ni diklassifikasikan  bawah 18SG bukannya PG13. Sebagai seorang ibu aku berani mengatakan bahawa filem ini bahaya ditonton oleh anak2 kita kerana boleh merosakkan akidah. Sipnosis cerita cakap lain tapi bila dah tonton lain pulak jalan ceritanya..Prometheus ialah nama sebuah kapal angkasa yg membawa sekumpulan doctor saintis ke sebuah planet yg mereka percayai tempat persembunyian tuhan, dalam konteks ini tujuan utama research mereka adalah untuk membuktikan kewujudan tuhan dengan melihat sendiri rupa sebenar tuhan..Astagfirullahalazim…sampai sini aku dah beristifar banyak dah dalam hati. Nasib baiklah tak bawak anak2 sekali menonton.

             Kononnya bila bertemu dengan tuhan, mereka berhak untuk bertanyakan persoalan kenapa manusia  dicipta dan dicampakkan ke bumi. Apa tujuan manusia dicipta dan kenapa setelah tuhan cipta manusia kemudian hendak dibinasakan atau mati pula…aduiii..apa punye cerita nih..hanginn aku nengok!!.  At last jumpa jugak dengan makhluk yg diangggap tuhan...macam alien jer aku tengok. Alien tu badan macam manusia, besar tinggi tapi muka macam alien lah. Lepas tu benda alah tu pulak bunuh dorang semua..hishhh padan muka.  Dalam cerita ni ada adegan seks yg tak sesuai budak2 tonton juga, dan adegan ganas yg agak melampau bila Doktor Elly memotong perutnya sendiri guna mesin robot khas  untuk mengeluarkan baby aliennya…hishh ngeri betul nampak real caesarean yang dia buat..dengan darah yg terpercik2.

             Kesimpulannya bagi aku cerita nih tak sesuai ditonton oleh anak2 kita sebab boleh merosakkan akidah umat Islam, jalan cerita dia nak cari tuhan yg menciptakan manusia sebab banyak isu tak puas hati dengan kejadian dan kematian manusia…nape lah mat salleh nih buat cerita macam ni. Padahal jawapan bagi persoalan mereka semua tu ada dalam Al-quran kitab Allah, mereka yg sesat ini sangat ego untuk mengakui kebenaranNya..hingga sanggup melakukan perkara2 bodoh untuk menyangkal bahawa Allah s.w.t adalah Pencipta yg sebenar-benarnya..

P/S: nak letak gambar ni pun tak suka sebenarnya, tapi takut korang tak tau cita yg mana pulak...jadi aku letaklah jugak.

Layang-layangku terbang melayang-layang…

Cuti2 sekolah ni memang penat sikit melayan kerenah anak2  yg sentiasa aktif dan tak tahu penat langsung. Nak ajak berjalan jer keje diorang ni, mana nak pegi berjalan lagi kakak...wayang? semua cita best2 dah tengok dah..

At last dapat idea..jom main layang2..kat taman kitorang ni tengah famous main layang2 siap ada brother yg menjualnya lagi kat padang tu. Tapi kita tak nak main kat padang tu sebab  orang ramai nanti berlaga tali layang2 pulak. So kita main kat satu tasik di pinggiran Cyberjaya yang cantik dan terpencil…tak ramai orang tahu dan takde yg melepak kat situ lagi.

layang2 terbang melayang...terbang melayang di tengah padang..

Sharmeen yg tension sebab tak dapat pegang layang2...

Papa sempat posing walaupun ku cuba candid...huhh

Aqish dan Thirah yang sibuk menaikkan layang2 hingga tak layan umi snap gambar...

Alolololoo...Sharmeen ku kecoh jerit2 first time tengok layang2 terbang...hehehe, cian anak aku nih

One..two..three...pose everyone..wahhh..like mother like children..

Sample Analysis of Financial Ratios Between 3 companies

Comparison of companies financial performance in a same sector of industry. Assignment question required financial ratios of 3 years evaluation from year 2007 to 2009. Food Industry was selected and data information for the ratios were taken from the companies's financial statement 2007 to 2009. 

ANALYSIS OF FINANCIAL RATIO

 Based on calculation of financial ratios, the net working capital of Company QSR Brand Berhad of year 2007 is the lowest (RM58,189,000) compare to RM1,004,000  of year 2008. The net capital is increase tremendously in 2009 amounted of RM71,672,000. The higher the value of the working capital, the better as this show that company is able to settle its short term debts with surplus funds for its daily operating activities.

           For Kian Joo Can Factory, in 2007 the net working capital calculated of RM263,093,000. But in year 2008 the net working capital slightly decreases at RM255,497,000. In 2009 the company is able to increased better performance by showing of net working capital RM271,305,000.

          The net working capital for Kawan Food Berhad of the year 2007 is RM22,897,394. In year 2008 this company net working capital has drop to RM16,891,799. In year 2009 they slowly recovery, Kawan Food Berhad successfully increase his net working capital to RM23,413,440.

2.    Current ratios of 0.60 for company QSR Brand Berhad in 2007 is lower compared to 1.01 in 2008 and 1.16 in year 2009. This shows that for every ringgit of current liability, the company only has RM1.16 current assets for its payment in 2009. For Kian Joo Can Factory, current ratios of 2007 are higher at 2.34 compared to year 2008 of 1.98 and 2.15 for the year of 2009. From this ratio its measures the ability of the company to fulfil its long term loans using its current assets is higher in 2007.  Kawan Food Berhad are also shows the higher current ratios in year 2007 amounted 3.57 but drop dramatically in 2008 at 2.17 and slightly increase at 2.30 in year 2009. However, the current ratios of the company are not too low for concern and satisfactory for this industry.

3.  Quick ratio measures the ability of the company to pay its short-term loans quickly. The ratio of company QSR Brands Berhad is lower at 0.47 times in year 2007, slightly increase to 0.61times in 2008 and increase again to 0.73 times in 2009. This mean for every ringgit of current liability, the company has RM0.73 cash and assets that can be easily converted into cash to pay its short term debts immediately. For Kian Joo Can Factory Berhad, the quick ratio for year 2007 is higher at 1.30 times. But in 2008 the ratio slightly decreases to 0.96 times. The company is managing to recover in year 2009, its ratio increase to 1.18 times. Kawan Food Berhad has strong liquidity level compared to other company, for year 2007 its quick ratio is at 3.22 times. But its ratio is slightly decline at 1.88 times in year 2008 because of world’s economic downturn situation. Year 2009 the ratio is slightly increase to 1.19 times.

4.  Account receivable turnover is important as indication of ability of the company to collect debts from its customer. QSR Brands Berhad has high and stable account receivable turnover, the ratios in year 2007 at 727.58 times. Then year 2008 is the higher ratios at 1,194.51 times collection and drop to 532.36 times in the year 2009. This shows that this company is able to collect debts from its customer quickly and has available fund for other investments. For Kian Joo Can Factory the account receivable turnover at 4.15 times in year 2007, slightly increase at 4.61 times in 2008 and decrease to 4.38 times in year 2009. This shows that this company has high bad debts and this may indicate the inefficiency of the credit department in credit collection. Kawan Food Berhad has account receivable turnover at 5.22 times in year 2007, slightly higher in 2008 at 5.24 times in a year and finally up to 5.34 times in 2009. This is indication that company has put all efforts that drives to better performance of debts collection by the credit department.

5.    Average collection period shows the average days taken by the company to collect the account receivable. The average collection period of company QSR Brands Berhad is very good and satisfactory because the average collection is less a day. In year 2007 the average is 0.50 day, more efficient in year 2008 at average 0.31 day and increase to 0.69 day in year 2008. This is a good indication that company has sufficient fund to run their business because most of the business transactions are cash basis. This company also has very less bad debts. For Kian Joo Can Factory manage to get average collection period of 87.96 days in 2007. This is the higher average compared to year 2008 of 79.14 days and slowly up to 83.31 days in 2009. This is unsatisfactory and indication of poor debts collection practise in the company because normally the company’s credit period is 60 days but they only manage to collect debts after 80 days.

6.  Inventory turnover for company QSR Brands Berhad of 9.76 times is much better compared to 5.68 times in year 2008 and 6.14 times in year 2009. This means that the company can sell its inventory 9.76 times in 2007 which is the highest year of production. This is an indication that the company is able to sell its inventory quickly and reduce chances of obsolete inventory. For Kian Joo Can Factory, the inventory turnover is lower between years. From the ratios, its shows lower turnover at 3.46 times in year 2007, drastically down to 2.83 times inventory turnover in 2008 and manage to increase slightly in 2009 at 3.35 times a year. This is indicates the company holds a high inventory, the fund that could be invested elsewhere would be held by the inventory. Kawan Food Berhad has the highest inventory turnover that can be sold in a year. The inventory turnover at 11.97 times in year 2007, shoot up to 14.25 times in 2008 and slowly down to 8.89 times in year 2009. This is an indication that company does not keep surplus inventory which mean unproductive and not efficient in managing inventory.

7.   Fixed asset turnover shows the efficiency of the company in using its fixed assets to generate sales. The higher ratio is better to indicate the efficiency of assets management. The fixed assets turnover ratio for QSR Brands Berhad is higher compare to the two other companies. In 2007 the ratios is 3.74 times, 2008 ratios is slightly decrease to 3.65 times and drop again to 3.19 times in year 2009.Eventhough the ratios are still the highest between companies but the performance of company assets management are getting less efficient every year, this might be the company has lots of fixed assets. For Kian Joo Can Factory, the fixed asset turnover ratios are lower at 2.00 times in year 2007, slightly decrease to 1.94 times in 2008 and drop again to 1.45 times in year 2009. This indicates that the asset management of the company in generating sales is less efficient. Same goes to Kawan Food Berhad that has lower fixed asset turnover ratios of 1.96 times in 2007, 1.61 times in 2008 and 1.60 times in 2009. This scenario happened because of company has lots of unsatisfactory sales.

8.    Debt ratio of year 2007 for company QSR Brands Berhad is 40.57%, the company manage to lower down their total assets that are financed by debts in 2008 so the debt ratio decrease to 29.76%. In 2009 the ratio slightly increases to 36.29%. Creditors prefer lower debt ratio as the lower debt ratio, the higher protection for their losses upon liquidation. For Kian Joo Can Factory Berhad the debt ratios are lower at 27.83% in 2007, increase to 30.21% in year 2008 and manage to lower down to 24.67% in year 2009. This is because of their concern that creditors and suppliers might be reluctant to provide credit term on purchase as they worry that the company would not be able to settle the debts. Kawan Food Berhad also has lower debt ratio at 18.74% in year 2007, slightly increase to 20.37% in year 2008 and increase again to 23.79% in year 2008. The increasing percentage of debt ratio every year indicates that company has not aware of buying a lot of assets that is financed by debts.

9.    Gross profit margin measures the profit for each ringgit of sales that can be used to pay expenditures and cost of company. QSR Brands Berhad has higher gross profit margin at 70.96% in 2007. The higher margin is better because it shows company has lower costs and expenditures in sales activities. In 2008 the margin a bit decreases to 69.42% and drop again in 2009 at 57.75%. Kian Joo Can Factory Berhad has lower gross profit margin but maintain. In year 2007, the margin is at 12.76% which mean the company is generates only 12.76% profit after deducting all costs of goods for each ringgit of sale. The company is managing to push up their gross profit margin at 16.22% in year 2008 and then slightly decrease to 15.77% in year 2009. Kawan Food Berhad has consistent gross profit margin for these three years, 2007 at 38.05% of margin then slightly drop to 37.56% in 2008 but capable to recover the margin up to 43.45% which is the highest in 2009. This shows that the purchasing management and cost of the company are better in year 2009.

10.   Net profit margin also another alternative to measure the ability of company to generate net profit from each ringgit of sale after deducting all expenditures and costs including interest expenses and tax. QSR Brands Berhad has higher net profit margin of 14.37% in year 2007, then increase to 15.72% in 2008. But in 2009, the margin dramatically drop to 5.74% because of the company has to bear increasing of total expenditures, finance expenses and tax. Kian Joo Can Factory Berhad has lower net profit margin, in year 2007 the margin is at 5.93%. Then slightly increase to 8.61% in year 2008 but drop to 6.17% in year 2009. This shows that the company is lack for control of cost and expenditures. For Kawan Food Berhad, the net profit margin of 2007 is 13.65% and decrease to 12.60% in year 2008. But their consistent performance has successfully pushed up the margin to 15.48% in year 2009. This indicates that the company is capable in controlling their cost and expenses very well. 

GOOD LUCK FOR YOUR ASSIGNMENT!!....